How do I know the buyer is legit? It’s a thought that runs through the head of almost every small business owner as they plan to sell their business. Afterall, you have spent years building a success, and you want to be sure the person who takes over can continue the upwards trajectory.
The answer to the question is twofold - what they say and what you can find out about them. The best first step is to pick up the phone and have a conversation with the potential buyer. Getting to know the person and their motives can help you determine if they are a legit buyer or not.
Ask questions such as:
A real buyer will openly welcome this kind of questioning because they know the importance of developing a relationship between the buyer and seller. Don’t just listen to the answers, listen to how they are given – authentic buyers will be consistent and professional in their communication. It will be easy to tell if someone is unprepared by how they answer or behave on the phone; a legit buyer will know how to answer these questions.
Secondly, try and search for this potential buyer online, along with the list of people they may have given you (lawyer, accounting, brokers, etc.). Check out their social profiles, LinkedIn, etc. and see if their story makes sense. If they already own a business verify the company’s registration, check online reviews, ensure there are no legal proceedings against them, and request references from their business associates.
Selling your business is a big decision, so you want to be sure you have all the information necessary to make an educated choice. Regardless of what you learn, it is vital to get a Non-Disclosure Agreement (NDA) in place before you begin to disclose any information.